Battle continues over Timbercorp liquidation

Posted
June 30, 2009 11:29:00

Creditors have today voted to liquidate Timbercorp and 40 related companies, but a group of disenchanted grower investors is heading to court to try and stop the administrators from winding up 14 individual plantations.

ALI MOORE, PRESENTER: TimberCorp's administrators have won the first battle, but the war against a group of angry growers is only just beginning. Creditors today voted to liquidate TimberCorp and 40 related companies, but a group of disenchanted grower investors is heading to court to try to stop the administrators from winding up 14 individual plantations. Neal Woolrich reports.

NEAL WOOLRICH, REPORTER: The three hour meeting may have been heated at times, but in the end TimberCorp creditors had little choice.

NEIL WHITE, GROWER/INVESTOR: Major creditors want to see a quick, fast solution.

NEAL WOOLRICH: Creditors voted to wind up Timbercorp Securities Limited, the responsible entity for managing the group's crops and 40 other subsidiaries. TimberCorp's administrators Korda Mentha will now become liquidators, but a group of grower/investors say the insolvency firm is heading down the wrong path by now seeking to wind up 14 individual olive and almond projects within the TimberCorp group.

CHRIS GARNAUT, FINANCIAL ADVISOR: If we're successful in the court what it will ultimately do is put the schemes back into the hands of the members, so basically, Neal, taken away from the administrator into the hands of the members or the scheme members of the 14 almond and olive schemes that Korda Mentha are attempting to have wound up.

NEAL WOOLRICH: Chris Garnaut says the best strategy is to the cultivate crops to maturity and then sell them. He's rallied a group of financial planners to raise almost half of the $300,000 it needs to run a court case against Korda Mentha.

MARK KORDA, KORDA MENTHA: We've got 36 schemes and 41 companies and it's really complex and how do we get everybody represented? So we thought the court process would be the best way to do. It's a winding up application, but there may be different solutions that we find over the next few months as we work through the process.

NEAL WOOLRICH: Mark Korda warns it may take considerable time and money to appoint a new responsible entity for specific projects.

CHRIS GARNAUT: But once you've taken control of that, then you can start to deal with what I call the capital issues. And, really, it's with those capital issues, of course, you know, members will have to contribute further funding, but that was always the case in the first place.

NEAL WOOLRICH: The only thing that both sides emphatically agree on is that the responsible entity Timbercorp Securities Limited is insolvent and needs to be liquidated.

Mark Korda says growers still own their crops, but some fear that may change if TimberCorp defaults on its land rentals.

NEIL WHITE: We believe that it's important that people feel that there's an opportunity for these projects to be saved. I don't believe it's difficult to visit many of the plantations and see the plantations, in essence quite healthy, in most cases.

NEAL WOOLRICH: And Neil White says not enough information provided to grower/investors to make an informed decision about whether to contribute more money for the upkeep of their individual projects.

NEIL WHITE: Let's see some numbers. Let's see if it stacks up. And I do strongly disagree with the administrator that there are people who simply don't want to put more money in.

MARK KORDA: These schemes are - have had over $2 billion invested, so it's just gonna take some time to get that. Also, people - it is complex and people misunderstand things. So, we can always do things a bit better, particularly in the communication. We have three people full time on that, but we do have 18,500 investors, so, it's a big task.

NEIL WHITE: The case between Korda Mentha and the opposing creditors will be heard in a fortnight. Mark Korda says it's too early to say exactly what went wrong with TimberCorp or what sort of return unsecured creditors might expect.